Forum Report

The fourth forum on "Energy Security and Energy Transition," which was a follow-up to our first session, took place at Keio University in Japan on November 1st, 2013. Our speaker, Dr. Cho-Oon Khong, who is Chief Political Analyst with the Shell Strategy and Business Environment Team, gave a presentation titled "Security in a changing energy landscape." His presentation drew on scenarios conducted by Dr. Khong himself and his team.

Dr. Khong began by reminding the audience that scenarios are not predictions but a set of possibilities. Shell’s global scenarios set out long-term trends in the economy, politics, and energy, and their possible consequences. Their latest scenarios assert that the world is entering an era of critical transitions, on energy, geopolitics and the global economy. Ever since the early 20th century, oil has been so important that it has had an enormous impact on global geopolitical dynamics. However, the 1970s, when oil began to experience dramatic price volatility, brought energy security concerns to the fore, and we began to explore other, sometimes very costly energy sources.

The Shell team currently has two broad scenarios—which they call "Mountains" and "Oceans". These scenarios are based on contrasting patterns of behavior responding to a rapidly changing world. The Mountains scenario sees top-down, state-directed change. This leads to an energy future shaped by government policy, with energy security as a key concern, the dominance of gas in energy supply, and the roll-out of carbon capture and sequestration to deal with the climate challenge. Governments take the lead to push investment in large-scale energy projects with significant up-front costs, and with long term time horizons. The Oceans scenario assumes bottom-up, people-driven rapid change. The energy story here is shaped by surging demand and rising prices, leading to a relentless drive for energy efficiency, and the eventual dominance of solar and renewables. Solar power is especially suited to this world, as it can be rolled out through ocal cooperative solutions, helping energy supply keep up with demand, which ramps up across the developing world.

Longer term, our increasing awareness of impending climate change adds a new dimension to energy security concerns. The issue here is less that of a gradually warming planet; but more of climate variability as the world experiences greater weather extremes. And climate volatility will hit food production, causing drought in some places, and flooding in others. Energy security then interlinks with food security and water security concerns.

This contrast between the two scenarios Mountains and Oceans can help us think through possible policy responses from China, Europe, the United States, and Japan over the next thirty-five years. For example, China’s solution to its energy security concerns depends as much on how it chooses to deal with the rising urban middle class’s concerns over local environmental pollution, and also on its preparedness to engage in geopolitical competition with the United States. European policy, on the other hand, is likely to reflect a struggle between environmental groups, and others more concerned to revive growth and recovery from the current recession. The United States’ energy security concerns have been dramatically transformed by the shale gas revolution, with rising domestic production of gas; meanwhile, the role of the United States in maintaining global order remains uncertain.

These scenarios are especially useful for speculating on the future energy direction of Japan, especially given the current debate on nuclear power, where the advocates of nuclear power argue that there is no viable alternative, while citizens are generally in a distinctly anti-nuclear mood.

Reported by Rentaro Iida




Fumiaki Kubo
Fumiaki Kubo
University of Tokyo

The way Dr. Khong presented two scenarios was really stimulating.
I am wondering if we could interpret this distinction in a slightly different way. I thought the Mountains scenario might be symbolized by European approach, although I am aware that they are never identical. And I thought that the Oceans might be represented by American approach. When I say this, I have the stringent Kyoto Protocol approach in mind as something very close to EU thinking, led by governments, while I have shale gas revolution in mind when I let the Oceans being associated with the U.S., driven by innovation and private enterprises.
In 1990s, the former approach looked more influential. But in 2010s, it seems that the Kyoto style attitude has lost ground to more market-oriented or free-market policies supported by the U.S. and other developing countries. I do not imagine that the Kyoto style approach will regain the dominant status it once enjoyed in the future, although I am not sure any other alternative will.
Another thought, which is whether the U.S., now having vast amount of shale gas and shale oil at hand, has more or less influence on the Middle East, that is whether the US which will not buy oil from the Middle Eastis more or less influential in the Middle East. Many specialists seem to think that the US is more influential, but I am not very sure about this.
This was a meeting which gave us many intellectual stimuli that trigger countless questions, for which I thank Dr. Khong so much.